KIP-2 Act IV Emissions Redistribution
Proposal
Redistribute Act IV emissions to prioritize Hiding Game.
Background
Now that the Hiding Vault has been established as an enhanced lending protocol, both in TVL and total amount borrowed, I am proposing that we shift ROOK rewards away from it and bolster the Hiding Game rewards.
I am proposing this because I feel the current emissions structure does not reflect key aspects of our current ecosystem:
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As a MEV redistribution protocol, we should be focused on prioritizing opportunities that create MEV, where the Hiding Game vastly exceeds the Hiding Vault, as it is commonly assumed that around 95% of MEV is arbitrage, and 5% is liquidations.
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Hiding Vaults already receive significant benefits from Compound (interest and COMP distribution) and JITU (liquidity buffer). The ROOK rewards should be some (light) icing on the cake.
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Hiding Vault rewards are not currently motivating users to take positions that create MEV. Until we are able to dynamically distribute rewards to different assets in an effort to dissuade same token supply and borrowing, the Hiding Vault will not be utilized to its full potential.
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Lastly, users really should only earn ROOK as a partial refund for their lost collateral on a liquidation, as was the original intention of the Hiding Vault reward system.
My proposal is to reduce Hiding Vault Emissions by 50%, and send add that ROOK to the per-epoch rewards for the Hiding Game.
For reference, here is the current emissions structure:
Name | Percentage | # ROOK this Act | # ROOK per day |
---|---|---|---|
Hiding Vault | 40 | 20790 | 231 |
Hiding Game | 40 | 20790 | 231 |
Liquidity Pools | 20 | 10395 | 115.5 |
Total | 100 | 51975 | 577.5 |
Here is what the new structure would look like:
Name | Percentage | # ROOK this Act | # ROOK per day |
---|---|---|---|
Hiding Vault | 20 | 10395 | 115.5 |
Hiding Game | 60 | 31185 | 346.5 |
Liquidity Pools | 20 | 10395 | 115.5 |
Total | 100 | 51975 | 577.5 |
I would project that this decision will not significantly impact the usage of the Hiding Vault, due to the benefits described above, but would drive more users and volume through the Hiding Game. We will look more appealing to potential partners, we will more fairly reward frequent users of the protocol, and we will also drive Treasury growth.
Assuming that this could go live right as the first half of Act IV’s emissions that were minted ran out (Ethereum Block Countdown), the final proposed ROOK rewards for Act IV’s second half would be:
Name | Percentage | # ROOK Remaining | # ROOK per day |
---|---|---|---|
Hiding Vault | 20 | 5197.5 | 115.5 |
Hiding Game | 60 | 15592.5 | 346.5 |
Liquidity Pools | 20 | 5197.5 | 115.5 |
Total | 100 | 25987.5 | 577.5 |
Specification
On Sept. 28, 2021 starting after block 13318598, reduce remaining HV ROOK Rewards by 50% and increase HG rewards by 50%.